Cunningham v. Cunningham, 204 Conn. App. 366 (2021) (division of non-qualified non-funded defined benefit pension; implementation of judgment)
Officially released May 4, 2021
In Short: Domestic relations orders (“DROs”) dividing defined benefit pension plans are complicated and non-qualified defined benefit plans are more complicated. The trial court ordered a DRO to implement the judgment and Wife argued that the DRO impermissibly modified the judgment. However, the DRO was consistent with the Judgment, and Wife’s interpretation would have resulted windfalls to her that were not contemplated in the judgment. The DRO was affirmed.
The parties were divorced in 2011. Husband possessed a non-qualified, non-funded pension plan (“The Pension”) through his employer, Deloitte. Neither party presented the trial court with evidence regarding the present value of The Pension, but each provided a proposed distribution of The Pension, if, as and when it is paid.
In the dissolution, the trial court issued orders regarding distribution of The Pension. Such orders included that 50% of the marital portion of such pension, net of any taxes incurred, shall be awarded to Wife via a DRO. Husband was ordered to elect a 50% joint and survivor annuity. If Husband predeceased Wife prior to drawing The Pension, Wife was to be entitled to 100% of the preretirement benefit vested and accrued as of date of divorce. The trial court defined the numerator and denominator for calculating a coverture fraction for the marital portion of such pension. The trial court retained jurisdiction to address issues related to preparing and filing the DRO and dividing the Pension.
In a prior appeal, Wife appealed the judgment, claiming abuse of discretion, and the judgment was affirmed in 2013.
In 2019, Husband filed a motion seeking a DRO related to The Pension, and attached a proposed order with a schedule, the terms of which were agreed to by the parties in 2018, setting forth Wife’s share of The Pension benefit as of date of dissolution. Wife’s share was defined as 41% of the net pension benefit, based on the value of the pension benefit as time of dissolution, subject to cost-of-living adjustment (“COLA”), which was $84,261.
Husband’s proposed order addressed three issues:
1. The proposed order provided that if Husband predeceased Wife, the Wife’s survivor benefit would be capped at the $84,261 plus COLA. Any benefit above that amount would be paid by Deloitte or Wife to an account designated by Husband or his executor. This addressed the fact that Husband worked seven more years for Deloitte post-judgment, substantially increasing the value of his pension benefit, which additional amount exceeded the award that Wife otherwise was entitled to receive under the Judgment.
2. The proposed order provided that both parties would equally share the cost of Husband selecting the survivor annuity option. The cost of the election was the reduction in pension benefits during Husband’s life due to the continuation of benefits to Wife or other designee after Husband’s death.
3. The proposed order provided that the parties would share equally in any reductions to payment by The Pension implemented by Deloitte, on the basis that the pension plan was non-funded and Deloitte’s performance could result in a future reduction in benefits.
Wife filed an objection to Husband’s motion and proposed orders, arguing that capping Wife’s survivor benefit would constitute an impermissible modification of the Judgment, that sharing the in the cost of the survivor election imposed an obligation not contemplated at time of judgment, and that the proposed order regarding reduction was both speculative and unnecessary and that Husband should bear the risk of such reduction because his value in the pension is greater than Wife’s.
It was undisputed that The Pension was a non-qualified, nonfunded plan, that Deloitte refused to undertake responsibility to pay Wife her share directly, and that the parties agreed to a calculation of Wife’s share of the benefit when Husband retired in 2018 and began receiving benefits.
The trial court granted Husband’s motion with certain modifications to his proposal that are not subject of this appeal. Wife appealed, claiming that the trial court impermissibly modified the 2011 judgment by (1) requiring Wife, at Husband’s direction, to assign a portion of her 50% joint survivor annuity to a third party, (2) requiring that Wife share in the cost of the 50% joint survivor annuity election, and (3) adopting a formula that could result in an unjustified reduction to Wife’s marital portion of the retirement benefit that she receives under the pension plan.
As to Wife’s first claim, that forcing her to assign a portion of her 50% joint survivor benefit to Husband constituted an impermissible modification of the Judgment, Husband argued that it was necessary to implement the judgment so that Wife would receive only the marital portion of The Pension. The Appellate Court noted that the construction of a judgment is subject to plenary review and that pension benefits are a form of property. The trial court may not modify a property assignment, but may issue orders to effectuate the judgment. Where a decision as to whether a court has subject matter jurisdiction is required, every presumption favoring jurisdiction should be indulged. The Appellate Court agreed with Husband that the order effectuated rather than modifying the judgment. The judgment provided for the cap to Wife’s benefit valued as of the date of the marriage, and the implementation had the effect of enforcing that cap, in the event that Husband pre-deceased Wife. The implementation was consistent with the intent of the judgment and the retention of jurisdiction spelled out therein.
Wife’s second claim was that requiring her to share in the cost of the joint survivor annuity election also constituted an impermissible modification of the judgment. Once again, the Appellate Court subjected this claim to plenary review. The DRO provided that Wife “shall proportionately share the cost of the 50 percent joint and survivor annuity.” The Appellate Court found no error or impermissible modification in the implementation, finding that it simply implemented the requirement of the joint and survivor election and the “cost” of that election.
Wife’s third claim was that the formula adopted regarding potential future reduction by Deloitte of the pension monies improperly reduced her portion of The Pension, was not ripe for adjudication and was without evidentiary support. The Appellate Court found that this order merely clarifies and effectuates the judgment. It was consistent with the judgment, in that it provided that the parties equally share the marital portion of The Pension as contemplated in the Judgment.
The Judgment was affirmed.